Wednesday, August 18, 2010

Ever since I began my entrepreneurial life in the early 1990s, I have dealt, rather pleasantly, with foreign investors of all hues, shapes and sizes. One foreign investor or the other sits atop every key milestone. In the early days, I was, in their lingo, a person with 'promising intellectual capital' in a 'virgin consumer-focused business' which was likely to witness 'explosive growth'. So if they gave me $5 million in cash and a chunk in equity, I could build a company which could become a leader in 'India's nascent media industry'. That's the first kind of foreign investor I encountered way back in 1993.

As our operations grew, we took bigger bets The early-stage venture capitalist gave way to the late-stage private equity chap, who now gave us $20 million, but took a smaller chunk of equity, simply because 'start-up risks had been mitigated, and proof of concept was visible in our growing operations'. Their excitement about India was always subdued, tinged with an edge of scepticism, if not outright disbelief.

Every conversation would end with some variant of the same observation: 'You know what, it's not like that in China-or Korea, or Thailand, or Dubai.' As we acquired commercial muscle, we moved 'up the value chain' to do deals with 'foreign strategic players'. Our first joint venture was with CNBC to launch a twenty-four-hour business news channel in India. We made all the investments, took all the risks, and paid them a royalty. We followed through with another deal with CNN, to launch a twenty-four-hour general news channel in India. We then bought 50 per cent of Viacom's India operations, including such iconic brands as MTV India, Nickelodeon India and VH1 India. Next on our roll call was Forbes India. The colour of money changed from 'financial' to 'strategic', but the scepticism never ceased.

Frankly, I could never escape the feeling that India was just a 'hedging instrument' for the investors. While they put serious money and conviction into China, Korea, Thailand and Dubai, their attitude towards India was, to use their terminology, somewhat 'derivative' or 'collateral'.

A question began to beg for an answer: do these foreigners even 'get India'? A couple of years ago, one of our crucial foreign bankers asked me to address their top leadership on 'any topic that could keep a hundred bankers interested for about an hour before cocktails begin'. The bank was flying in its overseas board and management council to India for their annual summit. It was a first for them, and for India.

I stuffed some half-baked thoughts into my jacket, and reached the hotel in downtown New Delhi. I had given my talk a working title: 'Why the West Can't Figure Out India: A Gut-level Assessment of India's Political/ Economic Legacy'. At the end of forty minutes I concluded: 'now, only a solitary wrinkle remains for India. It is still not considered as sexy as China, because India's policymakers are still too timid, cowed down by decades of socialism and risk aversion. They underestimate India more than anybody else does. On the one hand, young India is supremely confident; entrepreneur India is straining at the leashes, foreigners are gung ho-but there is only one constituency, India's own policymakers , that needs to come on board, needs to have the same confidence in their own country that others do. Once that happens, this last wrinkle will go, and India will be as sexy, if not more, as China.' I ended by waving my arms, hoping to signal via bodily motion that I had ended on a flourish.

I sat down to dinner at the head table. The global CEO pumped my hand and thanked me for 'taking the trouble'. He congratulated me, on cue, for an 'illuminating talk' (what else could he say?). Then, as an afterthought, he asked, 'So, when is the book coming? When are you going to publish all of this? It will be a bestseller.'

With telling insights into the two Asian powers' histories, polities, economies and cultures, Superpower? The Amazing Race Between China's Hare and India's Tortoise is a brilliantly written, superbly documented, rich and comprehensive account of the race to dominance between the two neighbours.

If 200 years of economic theory is sound, then India simply must succeed in creating an America- and Japan-like miracle. Continuing to infuse physics into economics, India's growth is like the 'wave theory': closer to the epicentre, the waves are tiny, densely packed, and look really small.